Out to Pasture

Why We Import Beef

Thursday, April 29, 2010 7:28 AM by: AnonymousI have a simple question, why are we importing beef? You mean we can't raise enough of American cattle right here in our own country. Also why are we beholden to the OIE? As I understand it, the American farmer usually has no trouble keeping disease in check, these problems all originate from cheap beef importers. I'm starting to like R-Calfs line of thinking.

First, an important thing. And not just because I’m tired of arguing with anonymouses (anonymice?) about beef imports. I’m also a music aficionado. Something of a connoisseur, if you will. You should go to http://www.rathergood.com/beef where you can find a mighty fine song about beef. Well, maybe not “mighty fine” but for sure mighty interesting. You didn’t see that many cats sing about beef before computers, you know.

Second, as to the simple question, above, posed after last week’s blog let us think a while.

Why are we importing beef? Why are we beholden to the OIE?

We import beef because we export beef. Until the BSE disaster, we got more dollars selling beef than we spent buying beef. And we will again. Because the U.S. has cheap grain and lots of feeding expertise, we have a unique position in the world market. If we can ever get fair trade established, we will sell a lot more beef than we import. In fact, we will export more beef than we consume domestically.

Our imports consist of a few cattle from Canada which compete directly with the cattle we grow, a few feeder cattle from Mexico, which compete with our own feeder cattle, and a lot of grass fed beef from Australia, which our processors mix with the excess fat from our fed cattle to make hamburger. We don’t sell much beef to Australia. That would be like selling aggies to Texas. We’ve got too many of our own. But we do sell a lot of beef to Canada and Mexico, so what we get from there is not all imports.

Our exports consist, primarily, of a bunch of byproducts that Americans won’t eat. You can follow the value of those byproducts at http://www.ams.usda.gov/mnreports/nw_ls441.txt if you choose to. They add about $130 to the value of a fed steer at the moment, and would add much more if the markets were fully open.

(But, of course, the anonymice don’t ever get those dollars, do they? The packers ge tthose dollars and no anonymous ever believes that packers base what they pay for fed cattle on what they get for what they sell. No, it’s all based on what the packers agree to pay for cattle on Monday morning, during their weekly squawk box confab, and that price is, of course, determined by how many independent producers they want to run out of business this week.)

Yes, as last week’s other anonymice pointed out, the markets are not fully open to U.S. beef. There is a lot of protectionism out there, and in just about every country we trade with—and our own, for that matter--farmers enjoy a disproportionate share of political power they employ to fight imports.

Which brings us to the second part of the questios. “Why are we beholden to the OIE?”

The OIE attempts—attempts—to establish a set of rules under which beef can flow freely. They look at the science and they decide what does and does not pose a risk. In theory, if everybody followed the rules, that would limit the impact of protectionist sentiments. But, if everybody “followed the rules,” hockey and professional wrestling wouldn’t be so popular, would they.

But if they did follow the rules, we would sell a lot more beef. For instance, experience and science in the years since the United Kingdom mad cow epidemic indicate that mad cow, or BSE, is no longer an important threat to health. The scientists found the cause of it and the regulators eliminated the threat. There are vestiges of BSE among cattle herds in some countries, but that’s all they are. Artifacts. Banning beef imports from countries with millions of head of cows because of a few BSE cases is not scientifically justified.

It is justified only by protectionism and by public misinformation. The OIE is designed to reduce the impact of protectionism and misinformation.

If I were to argue with my last couple of pro-trade blogs, it would be to call me “naïve.” I would say something like this:

“you are so naïve, you anti-American fool. Don’t you know that everybody out-trades the U.S. and has forever? You naïve fool. You’ve lost your mind. You redefine insantity!”—Anonymous.

That’s what I would argue.

And if I did argue that and then I had to answer, I think I would say something like:

“Well, yes, I guess you’re right. But if we pushed harder, if we used our buying power to force our trading partners to play fair, we could force them to play by the OIE rules.” And then I would say, again, that 9 out of 10 humans live not in the U.S. but elsewhere and I would say, again, that as they get more wealthy because of free trade the will eat more beef and there is not enough cow-making ability in the world to meet the demand of a future of global affluence and that all that portends a prosperous future for the U.S. beef industry. If we let it happen."

Well. Maybe I wouldn’t argue that again. Maybe I’m tired of arguing with you guys.

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My earlier comment ommited "billion" after "$1.3." The U.S. averaged a $1.3 billion loss in its trade with Canada and Mexico in each of the years 2004-2008. Sorry for the ommission.

Craig N.5/12/2010 07:48 AM

Brent,...http://www.agpolicy.org should hook you up to the link.

Brent5/7/2010 05:14 AM

@ Steve Cornett and Bill Bullard...I'll admit, i am an unabashed free trader and I have a question for both of you. Is there data out there that would show what would happen to the cattle market if the U.S. stopped importing all beef, both live and boxed? How much contraction would the cattle industy see if we tried to sell solely to America only?